Correlation Between Itafos and Yara International
Can any of the company-specific risk be diversified away by investing in both Itafos and Yara International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Itafos and Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itafos Inc and Yara International ASA, you can compare the effects of market volatilities on Itafos and Yara International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Itafos with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itafos and Yara International.
Diversification Opportunities for Itafos and Yara International
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Itafos and Yara is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Itafos Inc and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and Itafos is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Itafos Inc are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Itafos i.e., Itafos and Yara International go up and down completely randomly.
Pair Corralation between Itafos and Yara International
Given the investment horizon of 90 days Itafos Inc is expected to generate 1.34 times more return on investment than Yara International. However, Itafos is 1.34 times more volatile than Yara International ASA. It trades about 0.1 of its potential returns per unit of risk. Yara International ASA is currently generating about -0.22 per unit of risk. If you would invest 116.00 in Itafos Inc on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Itafos Inc or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itafos Inc vs. Yara International ASA
Performance |
| Timeline |
| Itafos Inc |
| Yara International ASA |
Itafos and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itafos and Yara International
The main advantage of trading using opposite Itafos and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itafos position performs unexpectedly, Yara International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Yara International will offset losses from the drop in Yara International's long position.| Itafos vs. ICL Israel Chemicals | Itafos vs. CF Industries Holdings | Itafos vs. Intrepid Potash | Itafos vs. China Green Agriculture |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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